Thomas v. Sprint Nextel Corporation et al

Filing 38

ORDER by Judge Thelton E. Henderson granting in part and denying in part 32 Motion to Stay. (tehlc3, COURT STAFF) (Filed on 9/2/2009)

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IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA

RUDOLPH THOMAS, Plaintiff, NO. C08-5119 TEH ORDER GRANTING IN PART AND DENYING IN PART MOTION TO STAY CASE

SPRINT SOLUTIONS, INC., Defendant.

United States District Court

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For the Northern District of California

This matter comes before the Court on a motion to stay filed by Defendant Sprint

12 Solutions, Inc. ("Sprint"). After reviewing the parties' written arguments, the Court finds 13 this motion suitable for resolution without oral argument and VACATES the motion hearing 14 scheduled for September 28, 2009. For the reasons set forth below, the Court now GRANTS 15 IN PART and DENIES IN PART Sprint's motion to stay. 16 First, the Court GRANTS the motion as to all claims alleging that the late fees

17 charged by Sprint violate California law. This case is one of three putative class actions 18 brought against cellular telephone carriers based on fees charged to California consumers 19 who make late payments. In one of those cases, Barahona v. T-Mobile USA, Inc., Case No. 20 08-1631 RSM (W.D. Wash.), the court referred to the Federal Communications Commission 21 ("FCC"), under the primary jurisdiction doctrine, the issue of whether the late fees charged 22 by T-Mobile are "rates" under 47 U.S.C. § 332(c)(3)(A) and, if so, whether they are 23 reasonable under applicable law. The court then stayed the case pending proceedings before 24 the FCC. In the second case, Ruwe v. Cellco Partnership dba Verizon Wireless, Case No. 25 07-3679 JSW (N.D. Cal.), the court originally ruled on a motion to dismiss that late fees 26 were not "rates" but, subsequent to the stay imposed in the T-Mobile case, granted Verizon's 27 motion to stay the case pending the outcome of the FCC proceedings. This Court finds it 28 efficient to now impose a stay on the third case concerning the same issue. Doing so will

1 promote national uniformity and judicial economy, and it is not disputed that the Court has 2 the discretion to stay proceedings under its inherent authority to control its docket. 3 However, as Plaintiff Rudolph Thomas argues and Sprint does not dispute, 47 U.S.C.

4 § 332 does not preempt state disclosure laws. See Peck v. Cingular Wireless, LLC, 535 F.3d 5 1053, 1057-58 (9th Cir. 2008). Accordingly, the Court DENIES Sprint's motion to stay as to 6 Thomas's third cause of action, under California Business and Professions Code section 7 17200, to the extent it is based on allegations that Sprint unlawfully failed to disclose the late 8 fees charged to customers. Sprint asserts that Thomas does not state a claim based on 9 allegedly deceptive business practices, but that assertion is clearly belied by the complaint, 10 which alleges that:

United States District Court

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For the Northern District of California

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Sprint's liquidated damages provision is unfair and deceptive because Sprint conceals its unlawful practice by not disclosing the actual amount of the fee in its form adhesion contract. . . . Sprint unfairly and deceptively hides in advance the amount of the [late] fee. If Sprint's penalty provision is legal, Sprint nevertheless should specify the exact amount in its adhesion contract so that consumers have the opportunity to agree to that amount (e.g., by continuing to use Sprint's services with knowledge of the exact amount) or reject it (e.g., by cancelling their service).

17 Compl. ¶ 2. The complaint also alleges elsewhere that Sprint's practices "are deceptive 18 because, among other reasons, Sprint does not even disclose the amount of the fee in the 19 adhesion contract imposed on Plaintiff and the proposed classes on a take it or leave it basis." 20 Id. ¶ 46. Thus, this Court finds that Thomas has attempted to state a claim based on 21 deceptive practices. Sprint argues in its reply that any claim based on fraudulent practices 22 alone would fail as a matter of law, but the Court does not find resolution of that issue to be 23 suitable on this motion to stay. 24 25 IT IS SO ORDERED. 26 27 Dated: 09/02/09 28 THELTON E. HENDERSON, JUDGE UNITED STATES DISTRICT COURT 2